MORE REVENUE. MORE PROFIT.
Pricing is not confined to the Finance function. It is a cross-functional process that requires collaboration from all client stakeholders: Attorneys, Billing, Business Development, Collections, (Conflicts?), Intake, Marketing, Practice Management.
Price is often the final piece of your business development effort: the deal closes only after the buyer has agreed to the price. Price negotiation is critical, as is the process that determines the firm's rates and fee agreements. Without a Pricing Strategy, your firm diminishes its Pricing Power.
Pricing belongs to Marketing: it is one of the four Ps of the Marketing Mix. Its roots are financial, but its purpose is to help communicate value and market position to buyers and to capture profit. Without a marketing-supported Pricing Strategy, your firm diminished its Pricing Power.
Pricing drives firm revenue, unlike other marketing options. Pricing improves firm profits, unlike other profitability levers. Without a Pricing Strategy, your firm diminishes its Pricing Power.
PATRICK ON PRICING
Driving Revenue: Value, Value Propositions and Value-Based Pricing
(ALA Legal Management, March 2013)
Alan Weiss said it best: “Every buyer wants to lower fees, but not one wants to lower value.” Not only does this truism encapsulate the challenge of serving clients, it reveals a law firm’s true business objective: offering value. In a capitalist economy, every consumer – whether conscious or not – asks the question: “Is this purchase worth the cost?” In other words, is the value of the purchase equal to (or greater than) the price paid? Every transaction is based on this type of cost/benefit analysis.
Prospective clients have four cost/benefit options when selecting counsel: choose you, choose a competitor, do the work in-house or do nothing. Why choose your firm? A singular – but not simple – reason: value. Because the essence of your client relationships – acquisition and retention – is rooted in the concept of value, it is imperative that you and your firm be proactive and deliberate in defining your firm’s value.
